The son of the top executive of BioVeris Corp. used $700,000 the biotechnology company says he misappropriated from a joint venture to buy or put deposits on nine luxury vehicles and spent an additional $1.7 million on residential property next to his home, according to a lawsuit BioVeris filed Monday in Delaware Chancery Court.
Jacob N. Wohlstadter also used a subsidiary of the joint venture to "purchase or attempt to purchase" residential property in New York with a price of $4.6 million, the lawsuit alleges.
Samuel J. Wohlstadter, the Gaithersburg company's chairman and chief executive, is a veteran local entrepreneur. BioVeris makes biological tests for things such as bacteria in food and biowarfare agents. It was part of Igen International Inc. until Igen merged with Swiss pharmaceutical company Roche Holdings Ltd. in February.
BioVeris, a publicly traded company, invested $115 million between 1995 and the end of May in a joint venture with Jacob Wohlstadter called Meso Scale Diagnostics LLC, according to the lawsuit. Meso researches and makes several diagnostic products with BioVeris. BioVeris alleges Jacob Wohlstadter made "lavish purchases of luxury items and real estate potentially for his personal use, even as he has admitted that the [joint venture's] financial status is precarious."
The lawsuit asks that Jacob Wohlstadter be barred from conducting transactions at the joint venture involving more than $10,000. It also asks that Jacob Wohlstadter be prevented from removing BioVeris's representative on the joint venture's two-person board of managers, Richard J. Massey. Lawyers in the case will hold a conference call today, said one of the lawyers.
Jacob Wohlstadter, who turns 34 on Friday, graduated from the Massachusetts Institute of Technology at age 19 and is chief executive and president of the joint venture.
Paul Caminiti, a spokesman for BioVeris, said the company had no comment. Senior executives declined to be interviewed.
Jacob Wohlstadter did not return two messages left on his office voice mail yesterday, and there was no answer at a listed number in Rockville that matched his name. A phone call to Richards, Layton & Finger, a Delaware law firm that, according to a court document, is representing Jacob Wohlstadter, was also not returned yesterday.
BioVeris's stock closed yesterday at $11.17, down 23 cents.
One analyst said the dispute will have little impact on the company's performance. "It's unfortunate," said John M. Putnam, an analyst with Stanford Financial Group, a Florida brokerage. "But I don't think it changes the prospects of the business in the longer term, though it muddies the water a bit in the interim."
Staff researcher Richard Drezen contributed to this report.